NICOSIA — Cyprus' economy is expected to rebound by 4.5% of gross domestic product this year following a pandemic-induced contraction of around 5.5% in 2020, the country's finance minister said Thursday.

Finance Minister Constantinos Petrides told an investment conference that the growth estimate comes attached with a "great level of uncertainty" because of how the pandemic may evolve.

The unemployment in Cyprus rate rose to an estimated 8% last year, which was less than anticipated, and it is projected to drop by a percentage point this year as economic activity picks up, according to Patrides.

Additional government spending in 2020 to buoy the economy resulted in public debt of around 120%, or 25 percentage points higher than in 2019. The minister said the Cyprus government's economic policy aims to put debt on a downward trajectory this year to reach a target of 98% by 2023.

Bad loans continue to pose a challenge to Cyprus' banking sector, the result of a 2013 financial crisis that brought the country on the verge of bankruptcy, Petrides said. He said the ratio of bad to total loans stood at 21% as of Sept. 2020, down from a 2014 peak of 45%, or 28 billion euros.

The minister acknowledged that the ratio remains high and said the government has prepared an "action plan" to deal with the rest of loans, although he didn't provide details.